IBM has high hopes for ‘Next Big Thing’ in software

By Richard Waters in San Francisco

IBM’s business from “service-oriented architecture”, which many experts believe will be the “Next Big Thing” in enterprise software, has doubled over the past year.

SOA, which promises to bring a deeper level of integration to today’s fragmented corporate IT systems, is finally taking root, though it remains only a “modest percentage of our revenues,” according to IBM’s head of software, Steve Mills.

IN Technology

Enterprise software makers such as IBM, SAP and BEA Systems, which sell to large companies and governments, have looked to SOA to spur the biggest new wave of spending since the rise of the internet in the late 1990s. Like the advent of the internet and, before it, the emergence of client-server computing, it is seen as a fundamental architectural shift that will pull the industry out of its post-bubble slump.

IBM’s $15.7bn in sales last year made it the world’s biggest software company after Microsoft. Mr Mills told the Financial Times the company had completed 1,800 SOA assignments for around 1,000 customers, making its activity in this area double the level of the previous year.

“We’ve seen a good take-up rate, a lot of interest,” he said, while adding that the technology has yet to become mainstream. IBM is looking to such work to lift the overall sluggish growth rate of its software business to 6 per cent, from just over 4 per cent last year.

The new software promises a deeper level of integration between different systems, enabling what were once stand-alone programmes to exchange data automatically. Eventually, that promises an answer to the complex and fragmented array of unconnected IT systems that most big companies built during the 1990s.

Early users of SOA software have applied it to integrating more parts of their supply chain, or to building better interfaces to their customers, said Mr Mills. By breaking down walls between their own internal systems, the software promises to make it easier for companies to adapt rigid technology systems to their business needs.

However, the complex nature of such technologies has slowed their adoption. Most big companies have traditionally bought and run much of their IT at a departmental level, adding to the balkanisation of their systems, said Mr Mills. By trying instead to organise their technology around business processes that cut across departmental lines, they face the problem of redefining some of their core business procedures, he added.

“They’re dealing with governance issues, how they bring together different parts of their business,” said Mr Mills. “Things really rub on each other – it’s the intersection of technology and business.”

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